Submission to the House of Commons Standing Committee on Finance Pre-budget Consultations

Transcription

1 Submission to the House of Commons Standing Committee on Finance Pre-budget Consultations August 2013 Text conforms to word limits established by the Standing Committee on Finance Albert St. Ottawa, ON K1P 5G4 Phone:

2 Modest Fixes for Canada`s Skills Gaps and Innovation Lag Skills gaps and lags in innovation performance remain pressing concerns. This is not unique to Canada; other G8 and OECD economies have faced these shortfalls and taken action. Unless we recognize that innovation and skills are about more than just generating PhDs or skilled tradespeople, and about a wider pool of talent, we risk perpetuating these problems by seeking to do more of the same and expecting improved outcomes. Federal initiatives that strengthen college and polytechnic applied research from Budgets 2012 and 2013 are yielding positive results. These successful projects will help companies take ideas to invoice, contributing to productivity and prosperity. Polytechnics Canada s modest, incremental and road-ready recommendations for Budget 2014 take into account the Federal Government s priorities of fiscal restraint and its need to consolidate existing resources for improved efficiency and effectiveness. Our focus for Budget 2014 is on increasing employer investment in apprenticeship, improving employer understanding of labour market supply and demand, and stimulating service sector innovation. Colleges and polytechnics are gateways to collaboration for small and mid-sized hard-working made-in- Canada employers. The impact of our recommendations will be felt by these employers who constitute the bedrock of Canadian industry, rather than the high-tech gazelles or the large multinational enterprises alone. Polytechnics Canada is an alliance of Canada s 11 research-intensive, publicly-funded colleges and polytechnics. Our members are BCIT, NAIT, SAIT Polytechnic, Saskatchewan Institute of Applied Science and Technology, Red River College, Conestoga, Sheridan, Humber, Seneca, George Brown and Algonquin. Our recommendations could, and should, involve the wider college community in Canada, not just our members. The differentiating features of polytechnic education are the wide range of credentials from trades training to undergraduate degrees, and the growing applied research and business innovation activity undertaken collaboratively with our industry partners, 95% of which are Canadian small and mid-sized enterprises. The competitive advantage of a polytechnic education for our graduates is the seamless transition from education to employment, fostered by experiential learning opportunities a hallmark of applied education. Over 280,000 students attend our member institutions each year, working towards credentials that equip them with the advanced skills for careers in Canada s most in-demand professions. In , 12% of our full-time students had already completed a university bachelor s degree, seeking to launch their careers by enrolling in a targeted graduate certificate or diploma program. 1 Our members also provide apprenticeship training to over 40,000 registered apprentices each year. Polytechnics Canada has developed several recommendations beyond the three that we have focused on here, targeted on improving small business innovation, as well as a suite of other ideas to improve Canada s decades-long sub-50% completion rate for apprentices. Polytechnics Canada is also actively engaged in the review of the Indirect Costs of Research Program, as announced in the federal Budget We look forward to participating in the government-led consultations and making the case for inclusion of college indirect research costs in this program, acknowledging the wide spectrum of applied research excellence already taking place at college and polytechnic campuses across the country. 1 12% is an average for all our members; in some individual cases, the percentage is as high as 19%. Polytechnics Canada: FINA

3 RECOMMENDATIONS 1. Improve Apprenticeship Completion Rates by Extending Tax Credits to Employers of Latestage Apprentices To address the urgent need for more certified skilled tradespeople in Canada, the Federal Government should provide a tax credit to the Employer of Record for employers who sponsor the last level of onthe-job training for those Red Seal apprentices who complete their certification. Such a tax credit creates a financial incentive for those employers who are retaining apprentices in their third or fourth year of training. Providing such an incentive lessens the impact of potential poaching by employers not willing to make the same investment and increases the number of certified tradespeople. The Federal Government should fund this recommendation through the existing tax code as either a new non-refundable tax credit worth $4,000, or by extending the existing Apprenticeship Job Creation Tax Credit to the later years of apprenticeship training and increasing its value for these years. This recommendation would generate tax revenue for the government due to the higher wage premium for a certified journeyperson compared to an apprenticeship dropout. One year of foregone tax revenue from employers would be offset by the increased personal income tax revenue from new journeypersons for the rest of their careers. The primary beneficiary would be those employers currently investing in apprenticeship training and seeing their apprentices through to completion of certification. Implementation of this recommendation would also benefit Red Seal apprentices working towards mastering their craft, but who have employers reluctant to release them for fear of poaching by competitors unwilling to invest in apprenticeship training. There is policymaker and apprenticeship community consensus that low apprenticeship completion rates are a continual problem in Canada. Young people are entering trades training in steady numbers. According to Statistics Canada, 60,000 young people entered trades training in The problem is that they are not completing their training and obtaining their professional certifications. Without the certificate of qualifications, these workers may be employed, but are adding to the pool of unskilled labour in Canada. The 2013 report by the House of Commons Human Resources Committee, called Economic Opportunities for Young Apprentices, urged the Federal Government to explore methods to improve apprentice completion rates by providing a financial incentive to employers (Recommendation 12). Current government supports for apprenticeship training concentrate on the individual apprentice and the early years of training (Apprenticeship Incentive Grant, Tool Tax Credit, Apprenticeship Job Creation Tax Credit). This tax credit would acknowledge the important role that employers play in training apprentices by rewarding employers who allow apprentices to complete their certification. 80% of firms employing skilled tradespeople don t invest in apprenticeship training. Our recommendation would encourage these employers to invest in apprenticeship training, rather than rely on poaching certified journeypersons from the competition. Consequently, this would improve decades-long declining apprenticeship completion rates, ensuring a continued supply of certified journeypersons to oversee the next generation of skilled tradespeople. Polytechnics Canada: FINA

4 2. Better Labour Market Information for Students, Educators and Employers Solutions to Canada s skills shortage and mismatches, youth unemployment and underemployment are hampered by the lack of reliable, accurate and timely labour market information (LMI). Consequently, without accurate and objective LMI, actors in the skills shortage debate are polarizing the issue with distorted data; still, the shortage carries on. Therefore, Polytechnics Canada recommends that two specific statistical surveys be modernized and improved: the Workplace and Employee Survey which provides critically needed data for educators, employers and employees, and the Youth in Transition Survey which yields much needed information on how youth transition between education, training and work. Employers and industry associations across Canada agree that accurate and reliable labour market information is needed. The 2012 report on labour and skills shortages by the House of Commons Human Resources Committee recommended that better, more user-friendly LMI is required, echoing the analysis of the 2009 Advisory Panel on Labour Market Information (Drummond and Miner). Labour market information is a federal responsibility. The government should reallocate a portion of the $18.3 million in savings that Statistics Canada freed up from the 2012 spending review to fund the Workplace and Employee Survey and the Youth in Transition Survey. These surveys and datasets already exist but are out of date and inactive, and should be quickly reactivated, tapping into the full potential of these investments. Accurate, reliable and timely labour market information benefits all stakeholders affected by the skills gap/mismatch. High school students, requiring reliable information on employment outcomes five years out will be able to make informed choices regarding the diverse options offered by Canada s postsecondary education institutions, leading them to in-demand jobs. Employers will benefit from access to granular local data and accurate forecasts of the talent pool of highly qualified skilled people. Federal and provincial policymakers will be better informed about both the supply and the demand side of the labour market, allowing improved targeting of policies and programs to any emerging skills gaps. Modernizing and implementing the Workplace and Employee Survey and Youth in Transition Survey will provide a comprehensive picture of labour market conditions and close the statistical information gap that the OECD has said exists in Canada s labour market data sets. These data sets can and should be used to improve the Working in Canada portal. Through the identification of current and projected skills gaps/mismatches, students will be better informed about the education requirements and skill sets needed for their careers. This will lead to improved national outcomes for taxpayer investments in education, skills and employment policy and programs. Without long-term, cross-sectoral data, Canada cannot build an inclusive talent pool for the 21 st century workplace. Polytechnics Canada: FINA

5 3. Create a College Social Innovation Fund The Federal Government, through Social Sciences and Humanities Research Council (SSHRC) funds, should improve the lagging productivity and innovation outcomes of Canada's service sector. Polytechnics Canada recommends the creation of a targeted fund that will connect existing college and polytechnic talent, facilities, and capabilities with the needs of service sector organizations, for-profit or non-profit, in their local communities to solve real world research problems. This will enable SSHRC to better respond to the charge it has received to increase the number of industry-academic partnerships it funds and improve traditionally weak links between social sciences and humanities research, and industry demand. Reallocate $5 million/year from the $7 million/year in savings from SSHRC s operational efficiencies mandated by Budget These savings were designated for industry-academic partnerships, and should be used to create a College Social Innovation Fund. SSHRC s track record of industry partnerships is weak, with a total of only 118 industry, government and NGO collaborations in the last reporting year. Emulating the model of the Natural Sciences Engineering Research Council s (NSERC) successful standalone college fund, the College and Community Innovation Program, would enable SSHRC to engage an untapped stakeholder community in the service sector already connected to their local colleges and polytechnics as takers of their graduates. Service sector companies, non-profits and communities will benefit from the innovative solutions developed through these projects, increasing the sector s productivity and competitiveness. The funded projects would require mandatory college student participation on interdisciplinary teams, which is a departure from SSHRC s traditional focus on funding the academic researcher. Students will gain applied research and innovation skills for potential employers. Colleges have strength in all of SSHRC s priority areas such as digital economy, community development and innovation, meaning that college faculty in fields such as applied business and applied arts will benefit from the opportunity to engage in social innovation research. While social innovation has many interpretations, we are using the term to refer to non-technological but business-service oriented innovation. According to Statistics Canada, the service sector represents 72% of Canada s GDP and 78% of current jobs. However, this also represents 75% of the long-standing Canada-US productivity gap. The College Social Innovation Fund would help to reduce our service sector productivity gap by focusing on process-innovations, like putting new knowledge into practice, streamlining operations for speed and improving service quality and efficiency. Further benefit is derived by fostering social research and innovation literacy skills in college undergraduates. Interdisciplinary research teams will allow students to discover the value of different fields of study, making students more attractive to future employers. Polytechnics Canada: FINA